WTO Rules in Favor of Antigua

A World Trade Organization (WTO) dispute panel today delivered a clear victory to Antigua and Barbuda in its case against the United States, declaring that U.S. domestic policy on interactive gaming is in breach of the General Agreement on Trade and Services (GATS). The panel recommends that the United States comply with its obligations under the GATS by amending its laws to permit cross-border Internet gambling in its territory.

"It's a great victory for any small country that has decided to take on a big one, and particularly the United States." - Sir Ronald Sanders

"It was obvious that the U.S.'s argument. . . wasn't going to go anywhere," said Sir Ronald Sanders, the chief foreign affairs representative for Antigua and Barbuda. "It was unsustainable, and that is exactly what the panel has found. The commitment under the GATS stands and the U.S. must now adjust its domestic laws to suit its international commitments."

He added, "It's a great victory for Antigua. It's a great victory for any small country that has decided to take on a big one, and particularly the United States. The U.S. had all of Washington behind it--the Department of Treasury, the Department of Justice and also the U.S. Trade Representative. We had a handful of people from a very tiny country. But what were on our side were two things: Justice and God."

The decision was delivered in a confidential report to the parties directly involved in the case, and those parties are now under a stricture of confidentially until the verdict is made public around the end of May. The United States will then have two months to appeal, but only on technical grounds. The decision is not likely to change.

Sanders speculates that the United States will try to delay the process as long as possible. "They've filibustered and dragged their feet through this entire thing, and they will probably continue to do so," he said.

U.S. officials have expressed disapproval with the ruling. "We intend to appeal and will argue vigorously that this deeply flawed panel report must be corrected by the appellate body," Richard Mills, a spokesperson for the U.S. Trade Representative's office in Washington, said.

Mills also said that the United States' commitments on services were "clearly intended to exclude gambling when the United States joined the WTO in 1995."

Assuming that the decision stands after the appeals process, there is not yet a clear indication of how the United States will react. The U.S. Department of Justice maintains that I-gaming is a violation of the Wire Act and recently began a grand jury investigation into advertising practices within the industry. Many speculate that the United States could choose to disregard the WTO decision and continue to perpetuate its restrictive policies.

Sanders, however, is confident that this won't be the case.

"This makes it pretty clear that the U.S. is out of bounds for harassing offshore service providers based in Antigua." - Jay Cohen

"At some point they will have to face the reality of a final decision," Sanders said. "The rope does have an end. It isn't an unending rope. And so they will have to do it, either because Antigua has got its judgment in this or because the dispute settlement mechanism says that they are spitting in the face of the decision and therefore decides to take its own action. The WTO could very well levy other hardships on them that have nothing to do with what we can do as a country. They can levy things from all over the world on the U.S. if they want to continue to disregard a ruling of the panel and the dispute settlement body--because what they would then be saying is that they are bigger than the WTO except when they win."

World Sports Exchange founder Jay Cohen, who this week completed a two-year prison term in the United States for conspiracy and violations of the Wire Act, has been following the WTO case closely.

"I think this decision will put a stop to that [Grand Jury Investigation]," said Cohen. "This makes it pretty clear that the U.S. is out of bounds for harassing offshore service providers based in Antigua."

"They are not going to kill this industry," he added. "The fact is that the U.S. gets more out of the WTO than any other country, and the U.S. has never not abided by a WTO decision. Do they want to jeopardize all their favorable rulings over this? I would like to see how the U.S. will handle this, I don't think they can just ignore it. A lot of people think the U.S. does what it wants, and they do, but history has shown that they get more out of the WTO and they abide by what they say. I am not going to say they won't appeal this, I am sure they will, but even that process is quick in the WTO."

By all accounts, the decision is big, but Nigel Payne, chief executive of Sportingbet, points out that it may still be too early to predict how things will change.

"Potentially this is a very exciting development for Sportingbet and the online gambling industry," Payne said. "But we need to see the actual report before we can start celebrating."

Antigua and Barbuda, which together have a population of 68,000, turned to e-commerce and interactive gaming as a remedy for a tourism industry that is constantly ravaged by hurricanes. Before the U.S. ban on Internet gambling, the islands hosted 119 gambling operators and employed 5,000 people. Those figures have dwindled to 30 companies and 1,000 employed. Sanders estimates that the country has lost over $90 million in income as a result of U.S. restrictions.

In other Antiguan news, Prime Minister Lester Bird was defeated in yesterday's general elections, ending a dynasty that had dominated politics on the islands since the 1950s. Bird's father, Vere Bird, became the first prime minister when the islands gained independence from Britain in 1981 and he remained in office until his son took over the position in 1994.

Sanders, meanwhile, has retired from his post as chief foreign affairs representative for the islands and all other government services. Sanders said it was fitting that the newly elected prime minister be allowed to appoint the officials of his choice.